India, UK resume trade negotiations: The potential flashpoints

NEW DELHI: India and the United Kingdom on Monday resumed talks for the Free Trade Agreement (FTA) negotiations, which is anticipated to enhance the estimated GBP 42 billion annual bilateral trade relationship.
The FTA talks, which began in January 2022, had been paused during their 14th round due to general elections in both countries. With the Labour Party now at the helm in the UK and PM Modi's third term, the discussions are expected to make headway.
The talks will be led by commerce and industry minister Piyush Goyal and UK secretary of state for the business and trade Jonathan Reynolds, who is in New Delhi.
India and the United Kingdom have a close partnership, built through collaboration on security and defence, new and emerging technologies, climate, health, education, research and innovation, green finance and people-to-people contacts. At the centre of this relationship is the collective aspiration to deliver economic growth and sustainable development, the ministry of commerce & industry said in a release.
Both sides are likely to set an ambitious target if the deal goes through. Given the global trade uncertainty in the wake of geo-political tensions and Trump's aggressive stance, bilateral trade deals can help push exports for both trading partners. Whenever talks have come to a halt, whether it was 2012 (when the UK was still part of the European Union) or in 2023, the issue at the centre of discussions has been the reluctance to provide more visas to Indian businesses and duty cuts by New Delhi for products of interest to the UK, or the EU.
For the UK, Scotch is a key area of interest and with India offering concessions to Australia under ECTA, and slashing duties in bourbon for the US ahead of PM Narendra Modi's meeting with American president Donald Trump earlier this month, there is an indication that the bar has been lowered - provided the British negotiators can do a good trade off. The Indian industry has also shown greater flexibility by indicating its support for a lower import price.
But it is keen that there is more flow through the bulk route, instead of bottled at origin, so that there is business and employment in India.
In return, it wants the UK also to treat Indian spirits in a fair manner. Besides, the domestic industry wants safeguards to ensure that Scotch and alcohol from other European countries do not make their way into India, routed via the UK.
For India, business visas are going to be a key demand, especially with govt keen to wrap up ongoing negotiations to boost exports, particularly of labour intensive products, such as textiles, at a time when industry in Bangladesh is going through a rough phase. A duty cut in the UK will help Indian garments keep more favourably with those going from Bangladesh.